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Condominium Super Lien Laws
By October 23, 2013 Posted in Community Association Law Share
Several states in the country, including New Jersey, have super lien laws that affect mortgages and property costs. Condominiums in New Jersey are also subject to these laws, and the attorneys at Griffin Alexander, P.C., condominium association lawyers in New Jersey, say that understanding the consequences of these liens and the existing state laws can protect condo owners from losing money or filing liens incorrectly, as a result of an unknown or unfulfilled condition of their state’s laws.
A lien is the right a creditor has to secure their interest in property until the property owner pays off their debt. If a person has a super lien, that statutory lien is given priority above all existing liens, as well as all liens filed on the same property at a later date. In the foreclosure process, junior liens and encumbrances are canceled if the proper notice is given, and mortgage companies recognize that the mortgage takes priority over all later interests. But when dealing with condo associations and common charge liens, special priorities can change the entire process—elevating these other interests to equal importance with the mortgage.
New Jersey and three other states—Florida, Massachusetts, and Oregon—have adopted “stand alone” statutes that govern super liens in the state, referred to as limited super-lien protections. In these states, limited priority is given to unpaid condominium and shared community association expenses. According to New Jersey’s law, established on April 1, 1996, any super lien filed after 1996 is applicable as to any prior recorded mortgages, and limited to six months of “customary condominium assessments” for the time period before the lien is recorded. The state does not give priority to late charges, interests, or attorneys’ costs.
A lien filed for a condominium association is ineffective, if it is recorded after the association receives a complaint or notice that the creditor intends to foreclose the mortgage for a defaulting unit owner. The filing of a lis pendens notice, letting the association know that action is pending, also invalidates a lien, if the lien is recorded after the notice is given.
For a mortgage, a super lien is effective only once in a five-year period. A lien filed by a community association can obtain priority over a first mortgage, provided the association gives a notice of the lien filing in writing to the mortgage holder. If the mortgage holder is unavailable, or cannot be found, a good faith effort to file the paperwork with them is considered enough under state law for the association’s lien to be given priority.
The Community Associations Institute (CAI), which operates in 33 states, represents common interest communities across the country, and has issued a statement regarding super lien policies. The CAI supports a limited assessment lien priority over a first mortgage, stating that community associations “have been bearing an ever-increasing burden of expenses” without benefiting from the same full priority lien status that is granted to government agencies. This situation often results in non-defaulting unit owners paying for maintenance and upkeep of the premises, condo association lawyers in New Jersey say.
At Griffin Alexander, a leading New Jersey law firm, our condominium association attorneys represent condo association owners for a variety of legal matters, including liens and property laws.